Customers outside the headquarters branch of the Dunfermline building society this morning were angered by the sudden collapse of the 140-year-old mutual under £1bn of bad property investments with most blaming the management.

"I'm very, very surprised. I really thought the Dunfermline was the backbone of the building societies' world," said Peter Gibb, 62, who in common with many of it 335,000 savers had believed the biggest Scottish building society's marketing claims that it had "a proud tradition of putting its members first".

"The fact that they've obviously delved into commercial property and had so many commercial liabilities surprises me. I thought they were a very well managed and structured organisation. I'm disappointed."

His wife Lyn, 63, was furious, claiming it had misled her into believing it was safe and secure. "I'm very angry because I had just arranged the transfer of some cash ISAs from the Abbey to here," she said.

"They told me they were very buoyant and they didn't take silly risks, and that was why I transferred. I'm going to tell them I have cancelled it.

"People will be going back to putting money under their mattresses. I'm going to put some money into premium bonds, because you're going to get the same rates of interest – nothing."

David Stephen, 67, a retired gardener and Dunfermline saver for 15 years, was crisp and blunt in his criticism of the mutual's management. "I think it's utter incompetence for a start, from the people who ran this company," he said.

"I have been a member for a long time and have a lot of money invested in them. I had always thought they were a great company, a great friendly company; no question of that at all. And suddenly this company collapses. It really is quite disgraceful.

"I want to go in and verify my money is safe; I'm going on holiday next week. I don't want this amalgamation to mean suddenly I can't access my money. This is my life savings."

However, protesters outside the building society's HQ this morning were angry about the Nationwide takeover and concerned about possible job cuts. About a dozen protesters said they wanted to show solidarity with the workers and were considering a legal challenge against the takeover by the Nationwide.

Brian Goodall, a Scottish National party councillor, said: "I think there is a lot of concern. A lot of people here will be concerned about their jobs, even if there is a takeover by Nationwide. "

Goodall pointed out the Dunfermline was a "key player" in social housing by providing finances to housing associations. "There is a real concern now about what the future will be for affordable housing," he said.

Outside the branch, Alexander Saddler, a retired principle teacher of music and a Dunfermline customer for 50 years, believed the mutual had been betrayed by the government.

Gordon Brown, the neighbouring MP, whose constituency once included parts of the Fife town, and Alistair Darling, an Edinburgh MP, should have kept the building society – Scotland's largest and oldest independent mutual – afloat, he feels.

"It's a very poor show when they could manage to support the likes of the Alliance & Leicester, Bradford & Bingley and Northern Rock. The £60m to £100m required to save the Dunfermline is a drop in the ocean compared with those other institutions," he said.

The sale of the Dunfermline's profitable savings business to the Nationwide was another example of a major local employer being let down by powerful Scottish ministers, in favour of bigger businesses "in the south", said Saddler.

In the early 1990s, the then defence secretary and Edinburgh Pentlands MP Malcolm Rifkind sacrificed thousands of jobs at the nearby Rosyth dockyard by giving the multi-billion pound Trident nuclear submarine refitting contract to Devonport dockyard in Plymouth, Saddler said.

He dismissed the Treasury's statement that the Dunfermline was not profitable enough to repay £100m in loans.

"I think it's a political decision, without a doubt," he said. "I'm not at all impressed. The Dunfermline chief executive said the other day it was sustainable. They seemed reasonably confident it was going to be saved and then suddenly Darling just pulled the plug."

However, Linda Hamilton, a retired Bank of Scotland employee in her 50s, and a Dunfermline customer for 19 years, was far less charitable. Its executives appeared to have been as reckless as those who ran HBOS, she claimed.

"When I was working for the bank, I was the lowest of the low, but you could see what was happening and we complained. You've no idea what stress we were put under for complaining and it didn't make any difference; we weren't a bit surprised [that it collapsed].

"Like a lot of my ex-colleagues, we were trying our best, but we saw what was happening. If we could see what was happening, I can't understand why the people at the top couldn't."